Chris Pryer and Jonathan Harris’ road to the 'broking life'

In this episode, find out:

• The changes to regulations and bank appetites
• How to avoid getting ‘the last phone call anyone wants to get'
• Simple steps to take through to settlement

And plenty more!       

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Full transcript

Speaker 1: Welcome to the Elite Broker podcast, this is your host Annie Kane.

Annie:  Hello everyone and welcome to the Advisor Elite Broker podcast. I'm Annie Kane, editor of the Adviser, and I'm joined by James Mitchell, the managing editor of mortgages here at Momentum. Today we're joined by Chris Pryer and Jonathan Harris of First Point, which you may know from Troy [Phillips] and Brett [Hartley], and also Greg Collins, he founded the company back in 2007, is that right?

Jonathan: Correct. Yup.

Annie:  Can you give us a little bit of background, guys, into how you got involved with First Point?

Jonathan: Well, it's a long story. Chris and I were fortunate enough to come out of school, straight into the mortgage industry. Brett and Troy had a company called Mortgage Asset Services, which they still have. We came straight out of school into that into a junior role. We started out doing the boring stuff, construction progress claims, ordering evaluations, all the un-sexy stuff, but we were fortunate enough over the 12, 13 years to transition from that into a junior credit role, senior credit role, BDM, and then we've taken that now into our broking life. It's a really good foundation and it's really paved the way to where we are now.

James:  They would've been great mentors to have during that whole process as well, Brett and Troy, in terms of their experience in banking and stuff like.

Chris: 100%, 100%. So, when I finished school, I was 17 and a half. It was January 1, 2006. Probably couldn't walk and talk properly at the same time.

James: Bad suit?

Chris: Yeah, I had a bad suit, probably a bad haircut, and I walked in not knowing how to write an envelope. So, they've pretty much taught me from that, into what we do today, just touching on that, the importance of mentors. So, Troy and Brett, I guess, for them, they took a punt on us. We were fresh from school, they had a big team already working for them and they've brought us on and really just brought us up from the ground up. So.

Jonathan: And took a real vested interest. We were having a chat in the car on the way here, you know, what was the most valuable aspect for us as we were coming up in the mortgage industry as 17-year-olds who've got no idea about it and the way that they mentored us through those early years, really, it was invaluable to where we are today. And as I said, while we were in the car, we were sort of having a think about it, and that's really important for any new-to-industry brokers; you have to really have that foundation before you can sit in front of a customer and give that proper advice.

Annie:  Yeah. I guess as well, being, as you say, 17 and a half, 18, it's going to be hard if you're put straight in front of someone. They're going to be like, "Who is this guy? There's a kid trying to give me a mortgage." And they're not going to have that kind of trust.

Jonathan: I need a few grey hairs and ...

Annie:  Yeah.

Jonathan: Have to have bought and sold a bad Commodore and had a personal loan.

Chris: So, for us, we didn't get in front of the customer until we were 22. So, and really, we did, I guess, an apprenticeship under these guys. So, learned everything from the ground up. So, ordering evaluations, doing progress constructions, doing the banking for the company and then moving on to assessing credit files and rounding up income and just all the real minor things, but knowing each individual step all the way through to settlement. I guess we, yeah, we didn't get in front of a customer until we were, sort of, 22 did we?

Jonathan: It's very unique and I guess that's the benefit of working for a smaller, boutique-style operation is that sometimes in a major bank or a major corporation, you can pigeon-holed into a certain role. They had enough faith in us and enough vision on what the endgame was to expose us to every aspect of the business and now, knocking on the door of 31, there's not much I haven't seen in how the business runs and it's been a really good exposure.

James:  I guess, one thing we don't talk enough about in the podcast is culture, company culture and that sort of stuff. We're always talking about how brokers can diversify and this sort of thing and leadership. But I think culture's really important, and I think just through chatting with Troy and knowing a bit about First Point and MAS Fund as well is there's a real culture, there.

Jonathan: The culture's king, that filters from the top and it goes all the way down to Jack and Louise that work with us. It's sort of ...

Chris: It's certainly unique. It's one way to do it. But our customers love coming in. We've got a footie on the office that we pass around and that's for after-hours, obviously, but during work hours it's all work and then a bit of play afterwards, but it's good fun.

Annie:  So, you're not playing footie with the customers at your desk?

Chris: No.

James: One thing we were talking about, just off air before we got started, was a bit of the complexity in terms of what's happening in mortgages or what has happened in the last couple of years and it's still playing out, where you've got banks coming in, then pulling out, and prices going up and down and policy changing and all this sort of stuff. And I guess it's all driven by what's happening on the regulatory front. What's been your experience with that, over the last couple of years and even right now in terms of what you're seeing?

Jonathan: Historically, I think, most brokers, if you had a look back maybe two or three years ago, would've had a lender who they pretty much dealt with primarily. They would've got, maybe, 70, 80% of the flow of deals, maybe a CBA or an ANZ or something like that. And I think with all of the regulatory changes and bank appetite changes that sort of happened, is that I think the spread of deals now is greater more than ever. A bank might have really competitive pricing on one particular deal segment, and then three months later they lose that appetite, someone else picks it up. So, I think the days of having that one primary lender that gets the lion's share of the business, I think, for us, I think if we look at our deal spread at the moment, it's more spread across than ever.

Chris: Just on the back of that, I think now more than ever, non-bank lenders are in play. So, I know Macquarie's sort of considering themselves as the fifth or coming aboard to be the fifth and they've put the right things in play to get there. So, with the investment in the technology, I know they've made a big play on that, but even the INGs of the world, Homelands Limited, Peppers and Liberties, where they predominantly used to go for the non-prime space, I know they're making a big play for that prime space and they're getting it.

But then, secondly, back to appetite, banks, so they're in one day, maybe the next they're not, and that's purely just from the regulators. So, it's really whose doors are open at that time as to where the deals go and it's obviously just getting the best outcome for the customer at the cheapest rate.

Jonathan: And I think it's really a good opportunity for brokers as well. I had a look through my aggregator CRM before we came in and there were 1,600 loan products on the rate CRM that was there on the spreadsheet. So, as a consumer, how are you supposed to navigate that and know what's right for you? Particularly when the appetites of lenders [are] changing. I think now is as an important time as ever to have a good broker, as a customer, to help you steer through that uncertainty.

James: Another thing which John, Chris and I were having a chat with before we got started was, this sort of ... That whole front end piece in terms of assessing exactly what your client wants before you put them, or before you suggest a few different options and in terms of whether they're self-employed, but also in terms of whether they want to go in to a branch and use that sort of bank facility or whether they're purely online. And I was saying, I often, I would quite like the ability to go into my branch and chat to someone but I just don't have that option, because they don't have tellers anymore, so I've got to use my phone.

But, talk us through a little about that in terms of different clients that you see. Some wanting this, some wanting that and how that plays out in terms of where you put them?

Chris: Yeah, I think the most important part of an interview is the client's needs and you can work that out within the first 10 to 15 minutes, I believe. So, and they're things like, "Do you want branch access? Are you looking for a principle and interest loan? Did you want fixed or variable? What outcomes are you looking for?" And then in that, you can see whether they need a lender with a branch network where they want to go and draw cheques from certain accounts and do all certain things, or whether they're happy with a non-branch type lender, say, someone like an ING DIRECT or something like that, where you could just do all your banking online.

I think that's the most important part, and if you do find a customer that goes into an online lender that actually needs the branch facilities, well then maybe the broker hasn't done the job that they need to do. And importantly, at the end of the day, the customer's needs are most important and brokers, in general, need to identify that and ensure and that's how you keep happy customers.

Jonathan: The last phone call anyone wants to get is the one three months down the track with the customer blowing up. "I can't do this, I can't do that, how did we end up in this product?" They don't want to make it, we don't want to make it and then you're having to rewrite the loan and sort of do it for practise. So, we really pride ourselves in making sure we're ticking all those boxes up front in the first meeting with the customer and they're getting exactly what they want. And that's really important for retention as well, you want to make sure you get it right the first time, so that the customer's happy moving forward. That's good for our business, it's good for the customer, everyone wins. So it's, yeah, it's really important in our process.

Annie:  I just want to ask a little bit about, we briefly touched there on all the changes in the industry at the moment. Is that something that you're finding? Clients are coming to you and being like "I just don't know where to start with these 1,600 products or something." Is that ... Are you finding that people are increasingly confused and therefore coming to you for help?

Jonathan: Oh, naturally.

Annie:  Or have people just done their research, really?

Jonathan: I can't recall a time where banking and real estate has got more media coverage, ever. On the Channel 9 news, they give you the clearance rates every week. I don't remember that ever happening. So, that's just an observation. You've got Ross Greenwood, who I think does some really good stuff, he's always talking about market commentary, fixed, variable, all that sort of stuff, so I think customers are being fed more information than ever and some come to the right conclusion on things, but I think it does create a bit of confusion and I think having a good broker is really important to navigate through all of that and make sure they get the right outcome.

Chris: Just on the back of it as well, I know three to four months ago there was some restrictions, credit policy wise, from certain lenders. And all that means is customers who bank with a certain bank, they can't get what they want from their ... Or can't necessarily get what they want from their branch and they need to go and see a broker to find a lender who's open to that type of business. For us, that's where, I guess, the importance of a broker comes in.

So, like a client wanted to purchase an investment property at 90 per cent, and a few months ago I won’t say who …There were some lenders, obviously, that pulled out of that purchase market as a sole sort of transaction, at that LVR, so what they had to do was obviously come to us and to source lenders that do that.

So, the more, I guess ... The diverse range of products and the diverse lending policies actually work in a broker's favour to ensure that they [meet the] customer's needs, and they get the best product for that.

James: And I think this plays into the sort of evolution of mortgage broking, a little bit like we were talking about earlier, where back in the day, a broker might have one or two banks where they send all their deals to, but you really need that diversity now because, yeah, you really need the spread, which is quite interesting. I just wanted to ask a little about self-employed clients and people who are in business. Do you deal much with self-employed?

Jonathan: Plenty. Yeah, we sort of ... Again, it's something that we pride ourselves on. With our background in credit, we were quite fortunate when we were coming through to have been taught by one of the head credit people in the Homelands Limited business… Les McDonald. Les McDonald, who's a stalwart, a bit of a stalwart, an icon of the lending industry. He taught us how to pull apart a set of financials so, you know, we do deals for some really big publicans, you know, self-employed, family trust, everything, there's not really a deal that scares us too much

James:  That's really good.

Jonathan: Once you learn how to follow the money it's easy, and then it's just a matter of finding the most appropriate lender, but we, definitely, we ...

Chris: We've got what we call a deal table, it's about three-metres long, and when the right deal pops up, it's just full of tax returns and we just sort of run through it. But, as I've said, it's quite a second nature for us. And I think from a broking perspective, to be able to pull apart complex trust transactions and multi-company things, it really gives us an advantage.

James:  Yeah, absolutely.

Chris: And it opens us up and secondly, when we're having discussions with the credit departments inside the banks, they really respect you for putting it together how they want it sent, which helps us but ultimately helps the customer as well.

James:  That's really good. I think that's sort of like old-fashioned broking as it's meant to be, do you know what I mean? That sort of ... You're actually finance broking, you know. And it's funny, because we speak to some brokers who are purely focused on resi and some who do a bit of commercial as well and then you get some brokers, like Dan Holden for example, at Holden Capital, who's purely focusing on the commercial space and he's flying to Hong Kong however many times a month and getting private funding for developers and all this sort of stuff, but in terms of what you guys are talking about, with the self-employed stuff and the commercial stuff, pulling deals apart, I think that's really exciting, you know? And it's definitely, yeah, definitely an edge.

Jonathon: It's something that you have to do. How can I sit there in front of a customer if I don't understand their financial position and tell them what's suitable or not? You need to know the ins and outs of their business, what the affordability is, balance sheet, all that sort of stuff. So, yeah, we take a bit of pride in our knowledge of that and we have a lot of success. There's not many we miss.

Chris: But it comes back to that mentoring piece, as well. So, I think new-to-industry brokers but possibly, I love the idea of that mentoring, so, the first two years you get mentored. But I think if you come from a ... say, if you're a truck driver or something and you come in to a broking style business, maybe there needs to be possibly something in between, type thing?

Is there something we can do where, maybe an apprenticeship at a bank for two years or maybe you have to pass an accounting course to be able to read certain financials and things like that.

James:  Just a higher level of education.

Annie:  Not just the four days, that whole thing.

Chris: Yeah, yeah, so the four-day diploma's really good, but we need to ensure that everyone can see and read and understand all these financials that are coming across their desk, because they're not giving advice, as such, but they're putting together applications and presenting them to banks and we need to ensure that everyone's understanding what we're presenting.

Jonathan: I think understanding process as well, there's so many processes from start to finish. It's not just a sales thing where you sit there, sign an application form and send it off and it takes care of itself. Getting the deal approved, that's the easy part, it's then navigating through certification, settlement, loan documentation, making sure all of that's true and correct, so, it's not a sales role. It's more than that.

I think having that exposure in a business that wrote loans day in, day out and seeing it front to back of where the processes need to be pushed to get a deal through quicker, I think that's the part that Chris refers to. By having some exposure in a business like that, I think you give yourself a much better chance when you come out in to a sales role, to be effective.

Annie:  Yeah, and I think what you were saying earlier, starting out at 17 and a half but actually not seeing a client or not being in front of a client on your own for, what, five years?

Jonathan: Correct.

Annie:  That gives you so much grounding, that is like doing a degree, almost. It's just sort of ... It gives you a lot of background information and a lot of history. I wonder if you're coming and sitting with a client, then, were you sort of thinking like, "This is easy, I already know what I'm doing, I know everything." Or were you already quite nervous?

Chris:    No no no, so, at ... Five years is plenty, right? And 30, we feel like fossils at 29 at the moment. But I kind of feel like a fossil of the mortgage industry already! But after the five years we were fine. And that obviously came from the mentoring from Brett and Troy, who had, obviously they had their different skills. Troy's the outlandish, the sales guy, and Brett, very methodical and very process-driven. Which was ... It's like yin and yang, it's perfect, right?

And we're trying to pass the skills similarly on to Jack, who's just come on board as well. He's 20, he's finished school, been through uni, just about to finish his degree and we've sort of got him on board. But I think for him, the best thing is just learning on the job, being a part of it, hearing conversations, how we approach people, how we build relationships with people… They're very important, they're ... I guess, loyalty and relationships are probably the two most important things for us and we're just trying to pass that on as well.

Jonathan: Just being a sponge, being in a space that's buzzing, you have the odd street fight here and there with a credit officer, you know, that happens from time to time. But absorbing all of that, how to navigate through that, how to talk to people. It takes you a while, as a kid, to learn how to talk to someone in a way that you get what you want, you're respectful but you know how to articulate your point. Yeah, that sort of process of just being in and around a lending business is important.

James:  It's funny, we were, Annie and I were having a chat a little earlier and we were talking about that sort of on-the-ground training and you know, it's the same in news rooms. It's the same thing. You don't realise it unless you're in it, but you really pick up things through osmosis in terms of learning on the job, just by being there, eight hours a day, nine hours a day, whatever. And I think that's true of most industries.

One thing I did want to ask, just before we wrap up, is, moving away from mortgages and credits, is what you guys do with your free time? I know Troy and Brett were big rugby guys, they're really into their sports, what do you guys do as sort of like, downtime, down in the Shire?

James:  If you have any downtime.

Chris:    Johno's downtime has just been-

Jonathan: Yeah, well, I've just had a little girl, Mila.

Annie:  Oh, congratulations.

James:  Well, congratulations.

Jonathan: Caitlin and I have just had a little girl, so, she was six months yesterday, so, you know, that takes up a lot of your spare time.

James:  So, no downtime for you.

Jonathan: But it's fantastic ... Yeah, there's a bit of downtime, I'm a bit of an avid golfer.

James:  Oh, nice.

Jonathan: A struggling golfer, I'd say.

Chris:    I'm a learning golfer. It's worse.

Jonathan: I do love that. I used to coach the local football side, but obviously, having a little girl, you lose your time there. And a bit of surfing here and there, which is a bit cliché for someone from the Shire.

James:  Yeah, yeah.

Jonathan: But you know, it is what it is.

Chris: And we're mad Sharks fans. Absolutely love them, yeah.

James:  Oh, awesome.

Chris: So, we're sponsors of the Sharks as well.

But yeah, we just love the beaches in the area, go to footie games on weekends, hang out with mates…

Jonathan: Oh, it's an awesome place to live. The Shire's really going through a real boom, you know? Obviously it gets a bit of a bad rap outside of the area, but really, it's like anywhere. It's like the northern beaches. Everyone loves their little pockets of the world. A lot of good restaurants, the beaches, waterways, bush, yeah, it's quite lovely.

Chris:    Lot of redevelopment at the moment as well. So, a lot of those red brick developments have been toppled over and there's some really beautiful penthouse-style apartments coming up.

And duplexes seem to be the ‘in thing’ at the moment as well, but yeah, there's a lot of families moving to the Shire, a lot of people from the east coming down. It's affordable and it's a beautiful place.

James:  I haven't been down there for a few years, but I'll have to get down there.

Annie:  I've never been.

Chris: You'll have to come down, check it out.

James:  Yeah, I tried, I used to live in a boat shed, a converted boat shed at 1 Taloombi Street, where there's sort of, where Gunnamatta Park meets…

Chris: Yeah, that's a good spot.

Jonathan: It's still the right spot to be.

James:  It was good, but I lasted six weeks, because there was a king tide and the whole place flooded and it was a nightmare, but it was paradise while it lasted.

Chris:    The water would've been warm, at least.

James:  It was warmer, yeah. Anyways, I think that's all we've got time for, this week, but ...

Annie:  Thank you so much for coming in.

Jonathan: Thank you, thanks for having us.

Chris:    Thanks for having us.

James:  I appreciate it.

Annie:  Well, that's all we have time for, as James said. So, thank you so much for tuning in. If you want to find out more about mortgages and what's going on in the industry, please do visit www.theadviser.com.au and we'll be back next week with some more excellent brokers.